As one wag said “predicting is very difficult, especially where the future is concerned”.

To look ahead 25 years is very daunting. Just think back 25 years to 1988 (mainly from: The Year 1986 from The People History):

USA was number 1, and USSR was number 2, in power if not in GDP terms. It will be another year before the fall of the Berlin Wall and the subsequent breakup of the USSR; and 13 years before the term BRIC is invented, to include Russia.

China was eight years into the economic reform
initiated by Deng Xiaoping; and a year before the infamous Tiananmen incident.

India had Rajiv Gandhi as its Premier, four years after his mother Indira Gandhi was assassinated by her Sikh bodyguards; and three years before he himself was assassinated by a female ‘Tamil Tiger’.

The Antidepressant Prozac introduced which quickly became the market leader for treating depression.

It is foolhardy for anyone to try and predict 25 years on. So we will try and predict where we can and where we cannot, we will try and identify the major uncertainties that lie ahead for China and for India. To that end we have read a lot and tried to compile likely scenarios. To paraphrase Sir Isaac Newton, “If I seem to be seeing so far, it is only because I stand on the shoulders of giants.” One of the giants, from whom we have borrowed extensively for this section, is the Economist (the world in 2036). We have acknowledged our sources, and apologise if we omitted anyone inadvertently.

Politically, India is the world’s largest democracy – though de facto single-party. China is the world’s largest autocracy, but a very successful one at that.

India has well-established and (largely) transparent institutions, many the legacy of British rule. China, by contrast, is still coming to terms with the “rule of law” (as opposed to dictat by local and national party cadres).

Militarily, China has developed a very modern army but lacks substantial experience. By contrast, although India’s army is under-funded in comparison, it not only has had experience fighting several major wars with Pakistan, its military tradition goes back to both British India days when Indian troops fought in both World Wars under the Union Jack and pre-Raj era when fighting the British with some success.

Both have problems with neighbours: India with Pakistan and to a degree with China; China with many of its neighbours both on land and across resource-rich seas.

Both have internal problems: India with its Muslim minority becoming polarised with both global movements and Pakistan-instigated unrest caused by the continuing Kashmiri issue, as well as with the Naxalites, Maoist dissidents; China with two of its three major minorities: Tibetans and Uighurs (fortunately the Mongolian minority seems to be relaxed about its well-being).

Economically, Jim O’Neill, Goldman Sachs (inventor of the term BRIC) said in The Economist’s ‘The World in 2011’ that China is likely to overtake the US by 2027. Some economists are predicting as early as 2020!

At present, China is no 2 after the US in GDP terms (est. 2010). India is still lagging behind at no 11 (2009). Both nations have pulled 100s of millions out of poverty, with China having a distinct edge. But neither China nor India is amongst the top 100 in GDP per capita terms. China has invested heavily in infrastructure and plant, and will kick off a new five-year plan in 2011 with more than $1tr allocated to infrastructure. Not to be beaten, India will rush to spend the remaining funds allocated to its $500bn infrastructure budget for the five years to March 2012. Private financiers will augment lending to the infrastructure sector from $2bn in 2010 to $9bn in 2013 and will help developers and contractors access these funds.By the way, for non-historians, China and India between them was estimated to cover 50% of the world’s GDP up to c400 years ago. So, if the predictions come true, future historians will look up these 400 years as an aberration!

India’s population is very young and even by 2050 youth will predominate. China, with its one-child policy, is beginning to become concerned that “it will become old before it becomes rich”.

One of the assertions made by many economists and other commentators including Raghav Bahl in his excellent book Superpower? The Amazing Race between China’s Hare and India’s Tortoise – is that although China is predicted to overtake the US as the world’s first economy – perhaps by the middle of this century, India will overtake China well before the end of this century.

We will examine the basis for these assertions and make our own predictions.

The remaining pages of this Prognosis section will comprise of – in 25 years: